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Bcci and Law Enforcement 9

Bcci and Law Enforcement 9

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Published by arielky

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Published by: arielky on Apr 25, 2009
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BCCI AND LAW ENFORCEMENT:District Attorney of New York IntroductionWhile the Justice Department's handling of BCCI has received substantial criticism, theoffice of Robert Morgenthau, District Attorneyof New York, has generally received credit forbreaking open the BCCI investigation.It did so not on the basis of having anywitnesses or information available to it whichwere not available to other investigators,including the Justice Department, and theFederal Reserve. Rather, District AttorneyMorgenthau broke the case because herecognized BCCI's importance and significanceas a case of global international organizedcrime, and devoted sufficient attention andresources to force out the truth.As District Attorney Morgenthau testified, hemade the decision to target BCCI once thebank's activities came to its attention becauseof his recognition that prosecuting a financialinstitution handling many millions in drugmoney could, in the long run, have as muchimpact on fighting crime as the hundreds of prosecutions his office was making every week against traffickers themselves in New York.[J]ust as illegal drugs are smuggled into thiscountry, illegal profits must be smuggled out.The sums involved are truly staggering . . . the
simple truth is that the wire transfer and thebank book are as much the tools of the drugtrade as the scale and the gun. . . the nexusbetween drugs and money means that if weare to succeed in the war against drugs, wemust be as vigorous in our prosecution of corrupt bankers as we are of street dealers.
In going after BCCI, Morgenthau's officequickly found that in addition to fighting off the bank, it would receive resistance fromalmost every other institution or entityconnected to BCCI, including at various times,BCCI's multitude of prominent and politicallywell-connected lawyers, BCCI's accountants,BCCI's shareholders, the Bank of England, theBritish Serious Fraud Office, and the U.S.Department of Justice. Each, while professingto cooperate with the District Attorney, in factwithheld information from the District Attorneyand in some cases, impede, delay, or obstructhis inquiry for months. Ultimately, Morgenthauproved BCCI's criminality, not because of information or cooperation provided by othergovernment agencies -- with the key exceptionof the Federal Reserve, there was almost none-- but because BCCI had left a trail of evidenceof wrongdoing there for anyone with thetenacity to pursue it.Information From Senate Aide InitiatesInvestigationIn the late spring of 1989, Jack Blum, who had
been the chief counsel to the Subcommitteeinvestigation concerning "Drugs, LawEnforcement, and Foreign Policy," during 1987and 1988, went to New York to meet withprosecutors working for District AttorneyRobert Morgenthau concerning information hehad about criminal activity involving BCCI.Blum knew Morgenthau's reputation as anaggressive prosecutor, and had worked withMorgenthau in the course of the 1987-1988Subcommittee investigation. Morgenthau hadtestified as the lead witness before theSubcommittee in February, 1988 concerningthe importance of money laundering inattacking crime. In that testimony, he hadstated that some $5 billion to $10 billion a yearwas being laundered through New York banksand other financial institutions, suggestingthat laws combatting money laundering wereinadequate, and that the New York banks had arole in preventing the laws from beingtougher.
In that testimony, Morgenthau madea commitment to the Subcommittee concerninghis approach to money-laundering:We are going to spend more resources now intrying to trace [illegal] funds. I think we aregoing to be successful, although, again, that isa labor-intensive kind of activity.
Based on the statements made to theSubcommittee by Morgenthau, Blum believedhe might be in a position to follow up on theinformation Blum had developed about BCCI in

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